Consumers expand their grocery shopping beyond supermarkets

Consumers are increasingly buying some of their groceries at locations other than supermarkets, such as Target, Walmart or 99 Cents Only Stores. Shoppers are pictured here at a Vons in Montebello. FILE (SGVN/Staff photo by Leo Jarzomb/SWCITY)

Fresh fruits and vegetables in the produce department is the single most important criteria for three out of four grocery shoppers in choosing where they shop.

Consumers are creatures of habit.

When they find a store they like, they tend to stick with it. But when it comes to buying groceries, those habits have clearly shifted. With a growing number of retailers now offering food, shoppers are no longer buying all of their milk, bread and other necessities at the supermarket.

Many have turned instead to stores like Walmart, Target, 99 Cents Only and just about any other kind of retail outlet you could imagine. Joumana J.B. Barakat is a prime example.

Barakat, a business liaison with the Foothill Workforce Investment Board in Pasadena, has a favorite neighborhood supermarket. But sometimes she ventures beyond that store in search of deeper discounts.

“I shop all the time at Vons, but lots of times I’m also finding what I want at the 99 Cents Only store,” she said. “I get produce there because it’s convenient and much, much cheaper. Sometimes I also get snacks for the kids there.”

“A lot of that started with the recession,” Lempert said. “People started to shop around at alternate retailers, not only to save money but also because they like a bit of an adventure. When you walk into a dollar store, you don’t know if what you buy today will be there the next time.”

Figures from the consumer market research firm Packaged Facts confirm that consumer preferences have indeed splintered.

In fact, only 53 percent of the food and beverage dollars spent last year in the U.S. were spent at supermarkets and grocery stores. The supermarket/grocery category in the Packaged Facts study also includes natural food supermarkets, limited assortment stores, small grocery stores and specialty food stores such as butcher shops and cheese shops.

Another 16 percent of those food and beverage dollars went to supercenters and mass merchandisers, 14 percent went to convenience stores and 9 percent went to warehouse clubs. The remainder — at 2 percent each — went to drug stores, dollar stores, online/mail order outlets and other retail locations, including vending machines and farmers markets.

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Packaged Facts’ study, “The Future of Food Retailing in the U.S.: Shopper Insights and Market Opportunities,” also notes that convenience stores outnumber supermarkets by a ratio of nearly 5-1. The nation’s convenience store count rose to a record 149,220 stores as of Dec. 31, far more than the 33,192 supermarkets that were in operation.

And although 83 percent of shoppers say they’re satisfied with the store or stores where they usually shop, only slightly more than half (56 percent) say they actually enjoy grocery-shopping. Another 18 percent actively disdain it.

That dichotomy, according to the report, suggests that retailers can do a lot more to make grocery shopping easier, less painful — and maybe even pleasurable for customers.

Lempert has some thoughts on that.

“When you compare a store like Trader Joe’s to a Vons, Ralphs or Albertsons, the appeal goes beyond the food itself,” he said. “When you walk into a Trader Joe’s you never want to leave. You want to get one of those Hawaiian shirts and you want to ring that bell. And for the most part, you’ll also be saving money.”

The Trader Joe’s “gang way” strategy plays well into that growing sense of adventure among consumers. Their stores introduce 10 to 15 new products a week, the company said, which means they have to eliminate 10 to 15 existing items to give the new merchandise a chance.

Lilia Rodriguez, a spokeswoman for the Albertsons supermarket chain, said her company is also working to make its shopping experience better for customers. The company recently eliminated its Preferred Card in favor of making its sale prices available to all shoppers, not just the ones who use the loyalty card.

“We are focused on what’s really important to our customers,” she said. “We want them to be able to find what they need, and we want to provide the best service. Here’s an example: Every year in this season we have hatch chili. It’s one of the hottest chilies, but foodies love it. You can buy a 30-pound bag of it, and we have roasters set up at selected stores where they’ll roast it for you. Then you can take it home and freeze it.”

Caesar Palacos, 26, of Long Beach said he buys many of his groceries from Albertsons.

But, like Barakat, he also looks for bargains and items that are a little less mainstream at other retail outlets as well.

“It’s pretty much anywhere,” he said. “I go to Albertsons for my milk and stuff, but I also go to the Mexican markets and the 99 Cents Only stores for water and other things. Sometimes when you’re in there you come across another deal on something else.”

Founded in 1982, Commerce-based 99 Cents Only Stores operates 326 retail locations, including 237 in California, 42 in Texas, 30 in Arizona and 17 in Nevada. The company began selling produce in 2003 and more than half of its sales now come from food and beverages, including produce, dairy products, deli and frozen foods and organic and gourmet foods.

In a statement issued Wednesday, the company said it is “very happy that many customers are finding our stores to be a great shopping alternative for produce and food items.”

Data from the Packaged Facts’ report reveal that the array of fresh fruits and vegetables in the produce department is the single most important criteria for three out of four (74 percent) grocery shoppers in choosing where to shop for groceries. Other product areas in order of importance are fresh meat/poultry/seafood (60 percent), store brand products (36 percent), local farm foods/produce (35 percent) and the in-store bakery (29 percent).

Lempert said the retail food space is going to heat up even more as Walgreens and CVS pharmacies have now entered the fray with expanded food offerings of their own.

“I think that will give the supermarkets more of a panic attack than anything else,” he said. “These are big chains, and now you have them selling wine, sushi and just about everything else you could imagine.”

Lempert also noted that online retailing and home delivery of grocery items is picking up. Currently, about 2 to 3 percent of consumers have their groceries delivered to their homes.

Ambience and variety are obviously important factors for shoppers. But the bottom line for many still seems to be money.

“While the economy has shown positive signs of recovery in the past year, consumers have been hit by higher gas prices, rising food prices caused by last year’s drought, mounting healthcare costs and increased payroll taxes,” the Packaged Facts report noted. “As a result, most are still feeling economically squeezed and spending-shy.”

Two out of three shoppers responding polled in the Packaged Facts’ survey indicated that they buy a lot of groceries that are on sale or promotion. And nearly half (47 percent) of shoppers used coupons or coupon codes during their most recent grocery shopping trip.

Forty-two percent checked store circulars, nearly one in three (31 percent) used store savings clubs/loyalty cards, and about 11 percent used coupon matching services (such as double coupons), which are not available at all stores.

Packaged Facts estimates that retail sales of food and beverages in the U.S. will climb to $638.8 billion in 2013, a 4.5 percent increase over $611.3 billion in 2012 and a 14.3 percent increase from $558.8 billion in 2009.

The five U.S. retailers of food and beverages, as of June 2013 were Walmart ($121.1 billion), The Kroger Co. ($58.5 billion), Costco Wholesale Corp. ($43.6 billion), Safeway Inc. ($34.3 billion) and Sam’s Club, a division of Wal-Mart Stores Inc. ($24.9 billion).